Riley turns to Democrats for support on gas tax bill

By Dana BeyerleMontgomery Bureau

Published: Thursday, April 24, 2008 at 8:42 p.m.

Last Modified: Thursday, April 24, 2008 at 8:42 p.m.

MONTGOMERY | After being rebuffed by House Republicans, Gov. Bob Riley on Thursday crossed the political aisle to ask Democrats for help with legislation in negotiating with ExxonMobil Corp. over a tax refund challenge.

Riley met with 33 House Democrats in a State House auditorium to ask for their support of legislation that would double the $40 million severance tax for ExxonMobil’s natural gas operations in the Gulf of Mexico.

A legal battle has erupted between Exxon Mobil and the Riley administration over what expenses Exxon Mobil can deduct before paying taxes on the value of the natural gas it produces along the coast. Riley believes that under an administrative tax ruling, ExxonMobil can recover $41 million in oil and gas severance taxes, and possibly more, depending on production. The ruling is being appealed.

“We must not subsidize big oil,” Riley said. “You put in jeopardy and imperil the whole structure and finance of the state of Alabama.”

State Rep. Gerald Allen, R-Cottondale, voted against Riley’s original bill in committee because, he said, the legislation singled out ExxonMobil and didn’t address overall tax deductions.

“I can’t support the governor’s bill and my understanding is ExxonMobil has made counter offers and they have been receptive to him,” Allen said. “We need to take a look at deductions.”

Riley said he would withdraw the legislation if ExxonMobil withdraws its push to get refunds.

ExxonMobil officials said the company made an offer to the Riley administration last week. “We are awaiting the governor’s response to our offer,” spokeswoman Margaret Ross said in an e-mailed response. The offer was not detailed.

Riley said House Speaker Seth Hammett suggested that he appeal directly to Democrats for help. “No more than half the Republicans said they’ll vote for this,” Hammett said.

In return, Democrats asked for the governor’s help on bills they want passed, including a corporate income tax bill that tied up the House all day Thursday.

Democrats didn’t commit their support but asked Riley to tell them his Republican vote count in the House before he pushes the bill on the floor.

ExxonMobil’s Ross said company officials were “disappointed” it did not have an opportunity to respond to the Democratic caucus but looks forward to addressing the caucus next week “to set the record straight.”

“We believe this issue can be settled without passing legislation that is ultimately harmful to Alabama’s investment climate,” Ross said.

Some legislators say they believe ExxonMobil doesn’t have to do offshore business in Alabama but Riley is counting on the company not going that far to prove a point.

Rep. Mike Curtis, D-Greenhill, said he was amenable to Riley’s plea. “I think he may have opened some ears,” Curtis said. “I’m leaning toward him.”

Rep. Jack Page, D-Gadsden, was dubious but said that the larger picture could transcend political differences.

“It seems like he couldn’t get his votes and he coming to us and getting the Democratic caucus to bail him out,” said Page, adding that the ExxonMobil tax appeal is still in court.

“I think we need to address it,” Page said. “I think the Democratic caucus knows its responsibility is to the state.”

<p>MONTGOMERY | After being rebuffed by House Republicans, Gov. Bob Riley on Thursday crossed the political aisle to ask Democrats for help with legislation in negotiating with ExxonMobil Corp. over a tax refund challenge.</p><p>Riley met with 33 House Democrats in a State House auditorium to ask for their support of legislation that would double the $40 million severance tax for ExxonMobil’s natural gas operations in the Gulf of Mexico.</p><p>A legal battle has erupted between Exxon Mobil and the Riley administration over what expenses Exxon Mobil can deduct before paying taxes on the value of the natural gas it produces along the coast. Riley believes that under an administrative tax ruling, ExxonMobil can recover $41 million in oil and gas severance taxes, and possibly more, depending on production. The ruling is being appealed.</p><p>We must not subsidize big oil, Riley said. You put in jeopardy and imperil the whole structure and finance of the state of Alabama.</p><p>State Rep. Gerald Allen, R-Cottondale, voted against Riley’s original bill in committee because, he said, the legislation singled out ExxonMobil and didn’t address overall tax deductions.</p><p>I can’t support the governor’s bill and my understanding is ExxonMobil has made counter offers and they have been receptive to him, Allen said. We need to take a look at deductions.</p><p>Riley said he would withdraw the legislation if ExxonMobil withdraws its push to get refunds.</p><p>ExxonMobil officials said the company made an offer to the Riley administration last week. We are awaiting the governor’s response to our offer, spokeswoman Margaret Ross said in an e-mailed response. The offer was not detailed.</p><p>Riley said House Speaker Seth Hammett suggested that he appeal directly to Democrats for help. No more than half the Republicans said they’ll vote for this, Hammett said.</p><p>In return, Democrats asked for the governor’s help on bills they want passed, including a corporate income tax bill that tied up the House all day Thursday.</p><p>Democrats didn’t commit their support but asked Riley to tell them his Republican vote count in the House before he pushes the bill on the floor.</p><p>ExxonMobil’s Ross said company officials were disappointed it did not have an opportunity to respond to the Democratic caucus but looks forward to addressing the caucus next week to set the record straight.</p><p>We believe this issue can be settled without passing legislation that is ultimately harmful to Alabama’s investment climate, Ross said.</p><p>Some legislators say they believe ExxonMobil doesn’t have to do offshore business in Alabama but Riley is counting on the company not going that far to prove a point.</p><p>Rep. Mike Curtis, D-Greenhill, said he was amenable to Riley’s plea. I think he may have opened some ears, Curtis said. I’m leaning toward him.</p><p>Rep. Jack Page, D-Gadsden, was dubious but said that the larger picture could transcend political differences.</p><p>It seems like he couldn’t get his votes and he coming to us and getting the Democratic caucus to bail him out, said Page, adding that the ExxonMobil tax appeal is still in court.</p><p>I think we need to address it, Page said. I think the Democratic caucus knows its responsibility is to the state.</p>